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York could compete for state economic development program

The proposal is expected to pass the Senate with an annual tax code bill Wednesday.

By ED MAHON Daily Record/Sunday News

Updated:
07/03/2013 06:50:07 AM EDT

York, PA -

A tax incentive program is credited with bringing hundreds of millions of dollars in development to Allentown, including for a hockey arena, a hotel and office complexes.

Recent actions by state lawmakers mean that York could be eligible for a similar program.

"It can exponentially enhance the development that's already occurring in the city," said state Rep. Kevin Schreiber, D-York, the city's former economic and community development director.

State Sen. Lloyd Smucker, R-West Lampeter Township, Lancaster County, introduced legislation in May to create a City Revitalization and Improvement Zone (CRIZ) program, modeled after a program in Allentown, for certain cities. A version of the proposal was incorporated into the annual tax code bill.

State senators approved the tax code bill on Sunday. House members passed an amended version of the tax code bill Monday, but didn't change the CRIZ provisions, said Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi.

The Senate is expected to approve the House amendments Wednesday, which will send the bill to the governor.

York would have to compete against similarly-sized cities to participate.

The program would create zones designed to revitalize vacant, blighted or abandoned properties, and new projects in that area would receive a tax break.

Under the program, revenue from income, sales, alcohol and certain other taxes that would normally go to the state or municipalities would end up being paid to finance development in these zones, said Michael Wood, research director at the Pennsylvania Budget and Policy Center.

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For its first full year of tax revenue, the Allentown zone received about $32 million -- from state and local revenue -- that it used to pay debt for the project and other required financing, said Mike Moore, communications coordinator for Allentown Mayor Ed Pawlowski.

Wood said the proposed CRIZ program has differences from the Allentown program. For instance, if a business moves from within Pennsylvania, it's supposed to receive only the benefit for additional taxes generated, compared to what it generated at its previous location, Wood said.

Wood expressed concern about these types of programs, saying they can be good deals for taxpayers if they spur job creation and economic development that otherwise wouldn't have happened. But he said they can also be "sweetheart deals for developers where state and local governments take on much of the risk."

State Sen. Mike Waugh, R-Shrewsbury Township, said the zones should pay for themselves, because they will be created in areas that aren't generating much revenue now.

"It's a good opportunity," Waugh said.

York Mayor Kim Bracey could not be reached for comment for this story. David Cross, chairman of the York Redevelopment Authority, urged lawmakers to create the CRIZ program during a legislative hearing in June.

Who's eligible?

Third-class cities with a population of at least 30,000, except ones under state receivership, would be eligible.

In addition to York, several other cities would be eligible to apply, including Lancaster, Bethlehem and Altoona, said state Rep. Kevin Schreiber, D-York.

Two zones would be created for the first few years, under the legislation. Beginning in 2016, two additional zones could be approved for each calendar year.

There would also be a pilot zone for a township or borough with a population of at least 7,000.